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Credit Suisse turns cautious on steel

Credit Suisse turns cautious on steel

Original Source of this post is:

https://www.timesnownews.com/business-economy/markets/article/credit-suisse-turns-cautious-on-steel/809181

The Credit Suisse brokerage notes the fall in Steel prices and is cautious on prices in the medium term.

Credit Suisse notes that Indian Steel prices have been falling.Credit Suisse notes that Indian Steel prices have been falling. | Photo Credit: iStock ImagesKEY HIGHLIGHTSCredit Suisse says that the theoretical discount to imports is likely to stay The brokerage notes that Iron ore prices have already fallen and coking coal will fall too.

Mumbai: Global brokerage Credit Suisse has turned cautious on Steel prices. It notes its scepticism on prices staying at these elevated levels in the medium term. Steel prices have surged significantly. In China, prices are at around $800-900/tn whereas, in India, HRC is at Rs. 65000-66000/tn after a continous rally in the last couple of months.

Credit Suisse notes that Indian Steel prices have been falling. Data from Steelmint suggests that Indian hot rolled coil prices have been dropping for the last 3 weeks. Domestic hot-rolled prices stood at Rs. 64500-65500/tn vs Rs. 65000-66000/tn ex-Mumbai a week ago.

This indicates that Indian spreads have declined. But that has not been the case for Steel prices globally. In Europe and China, Steel prices have managed to stay resilient and spreads have in fact improved. But they note that prices in Europe have started correcting and that is reducing the arbitrage.

Considering that Indian Steel prices are lower than what is seen globally, the theoretical discount to imports is likely to stay according to Credit Suisse. The last few months, Indian Steel prices, even after the price hike by mills has been available at a discount to imports, making them relatively more attractive

One of the reasons behind Steel prices staying elevated is also the surge in raw material prices. For the first time in more than a decade, Coking coal and iron ore prices, 2 of the key raw materials used in Steel making, were available in the market at a similar price range of $220-230/tn. Iron ore prices though have started falling. Credit Suisse reckons, Coking coal will soon revert to $160/tn too and iron ore.

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